Home sales are falling across the country
Four months in a row, existing home sales have fallen. In July, those sales fell 0.7 percent, according to the National Association of Realtors.
The combination of rising prices, higher interest rates and low inventory have conspired to reduce sales. Demand is there. Buyers are in the market, but sales are being impacted.
“Led by a notable decrease in closing in the Northeast, existing home sales trailed off again last month, sliding to their slowest pace since February 2016,” said Lawrence Yun, chief economist at NAR.
In July, existing home sales posted a seasonally adjusted annual rate of 5.34 million, down from 5.38 million in June. Now, resales are down 1.5 percent from a year ago, according to the report.
“Too many would-be buyers are either being priced out, or are deciding to postpone their search until more homes in their price range come onto the market,” said Yun.
Despite falling sales, prices rise. July’s median existing-home price rose 4.5 percent to $269,000 from $258,100 last July. That marks the 77th straight month of year-over-year price increases. “This weakening in affordability has put the most pressure on would-be first-time buyers in recent months, who continue to represent only around a third of sales despite a very healthy economy and labor market,” said Yun.
Inventory levels continue to decline in July by 0.5 percent to 1.92 million existing homes available for sale. Houses tended to stay on the market 27 days before being sold, that’s up from 26 days in June but down from 30 days a year ago, according to NAR. Fifty-five percent of homes sold in July were on the market for less than a month.
In the Northeast, existing home sales plummeted 8.3 percent, that’s 1.5% below a year ago, yet the median price of those homes increased 6.8 percent to $309,700.
In the Midwest, resales dropped 1.6 percent, and that’s 0.8 percent below last year. Still, median prices were up 2.5 percent to $210,500.
In the South, sales dropped a mere 0.4 percent, or 0.4 percent below last year. Still median prices were up 2.7 percent to $233,400.
Only in the western region of the country did existing home sales post a gain, 4.4 percent, according to the report. That’s still 4 percent below a year ago, but prices were up more than 5 percent posting a median of $392,700.
Luckily, mortgage interest rates have remained mostly flat since late spring. “Unfortunately, this pause in rates is not leading to increasing home sales,” according to the Freddie Mac report.